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SHIR HEVER, ECONOMIST, ALTERNATIVE INFORMATION CENTER: On April 13, Prime Minister Salam Fayyad of the state of Palestine tendered his resignation. President Mahmoud Abbas, after a brief meeting with Fayyad, accepted the resignation, but asked Fayyad to stay on for the transition period until a new prime minister is appointed.

NOUR ODEH, PALESTINIAN GOV’T SPOKESWOMAN: Prime Minister Salam Fayyad has tendered his resignation to President Mahmoud Abbas. The president has accepted this resignation and asked Dr. Fayyad to stay on as the prime minister of caretaker government until a new government is formed.

HEVER: The events leading up to the resignation was a disagreement over whether to re-install Nabil Qassis as minister of finance or not. But the disagreements between President Abbas and Prime Minister Fayyad are deeper. They are rooted in the question, which policies of the Palestinian government truly represent Palestinian interests, and which inadvertently serve the interests of the Israeli occupation.

Fayyad, a Texas-educated economist who worked in the International Monetary Fund, became a prominent figure in Palestinian politics mainly due to his ability to secure international support from Western governments and from the World Bank.

Salam Fayyad served as minister of finance for the Palestinian Authority between 2002 and 2005. His criticism of the Palestinian? Authority’s management of finance and lack of transparency have earned him respect amongst the middle and upper classes of the Palestinian population.

He formed his own party, the ?Third Way,? but in the elections of January 2006, he won only 2 out of 132 seats of the Palestinian Legislative Council.

These elections were highly controversial. Although western powers pressured the Palestinians to hold free and democratic elections, the same western governments did not approve of the results of the election. The Hamas party won 74 seats, the majority of the votes, followed by the Fatah party with only 45 seats.

The United States, European Union, and Israel boycotted the elected Hamas government and cut its funding. The fate of the Palestinian Authority was unclear. In a desperate effort to re-establish the Palestinian Authority?s international connections, President Mahmoud Abbas appointed Salam Fayyad as prime minister.

Fayyad was selected because he has legitimacy and international support, and because his small party could hardly be considered a significant faction in Palestinian politics. Hamas did not accept Fayyad’s appointment, and took over the Gaza Strip.

Fayyad proved to be more than a technocratic prime minister. He promoted a clear agenda, nicknamed ?Fayyadism.? Arguing that the Palestinian Authority needed a balanced budget, Fayyad promoted far-reaching reforms in the Palestinian economy–all that without representing a large part of the Palestinian voters.

When Yasser Arafat formed the Palestinian Authority in 1994, he created a large public sector. The significance of this large sector was not just economic, but also political. Arafat realized that by giving tens of thousands of Palestinians a chance to work in the Palestinian Authority and earn their living through it, he is creating a large public support base for the idea of a separate but small Palestinian state, the premise of the two-state solution.

But the World Bank reports have consistently opposed this policy. Representing a neoliberal view that a large public sector is bad economic policy, the World Bank repeatedly called on the Palestinian Authority to implement cuts to the public workforce.

Fayyad has taken these recommendation to heart, and one of his first acts as prime minister was massive layoffs. His further policies included installing pre-paid power meters in homes to ensure the cutting of electricity to households who cannot afford to pay their bills, because Israel had unilaterally deducted unpaid power bills from the monthly transfers of taxes it levied on behalf of the Palestinian Authority.

SALAM FAYYAD, PRIME MINISTER, PALESTINIAN AUTHORITY: I think this is perfectly legitimate for us to pursue. There’s no question about that. I would say it’s legitimate for us to pursue and extract from Israel. You know, going back to 1993, we Palestinians, the PLO acting on behalf of all Palestinians, in Palestine and diaspora, recognize Israel’s right to exist in peace and security. Is it so much to ask today of Israel to recognize Palestinians’ right to statehood on 22 percent of British Mandate Palestine? That’s when we are talking about Israel, about the rest of the world. Obviously, it’s perfectly legitimate for us to pursue that mission.

HEVER: In June 2009, Fayyad announced that a Palestinian state could be established by 2011. His comment drew criticism from Abbas and from many Palestinians arguing that true freedom and sovereignty are more important than an official stamp of statehood. In November 2012, a year after Fayyad’s prediction, the state of Palestine was recognized by the UN. But the Palestinians in the West Bank and the Gaza Strip remain under Israeli military occupation.

In June 2009, Fayyad announced that a Palestinian State could be established by 2011. His comment drew criticism from Abbas and from many Palestinians, arguing that true freedom and sovereignty are more important than an official stamp of statehood. In November 2012, a year after Fayyad?s prediction, the State of Palestine was recognized by the UN, but the Palestinians in the West Bank and the Gaza Strip remain under Israeli military occupation.

FAYYAD: Here is where I would like to take advantage of the outline or the introduction just given by President Perez when he said there are two tracks: building a state and negotiating peace. They are interrelated, obviously. Both are necessary, both are equally necessary, and both reinforce each other when they’re working well, and would work to the detriment of the outcome that we’re all pursuing if either is not working well. Both have to work well.

HEVER: Fayyad published a series of reports, which resemble World Bank reports, on the Palestinian economy. These reports promised to reform the Palestinian government, to streamline its financial system, and to promote the private sector. The reports were written in such a way that suggest that ?better governance? could actually somehow end the Israeli occupation and can therefore be seen as a form of resistance.

In 2008, and again in 2010, Fayyad organized two conferences for investors, mostly for foreign investors, in an effort to convince them to increase their investment in the Occupied Palestinian Territory. Bringing private corporations into the Palestinian economy has been criticized by organizations such as StoptheWall, because it is a beginning of a process of privatization. How can the Palestinian government start to sell off national assets even before it is sovereign?

A poll published in 2011 showed that 45 percent of Palestinians in the West Bank and 41 percent in Gaza said that Fayyad’s government was doing a good job.

Last year, large demonstration broke out in the West Bank against his economic policies. Palestinians chanted in the streets that his economic policies help sustain the Israeli occupation.

It has been over seven years since the last elections in the Occupied Palestinian Territory. Talks of reconciliation between Hamas and Fatah have advanced slowly, with the aim of holding the elections so that all parties may participate on equal footing. Fayyad offered to resign in order to facilitate a unity government, although Israel has threatened that it will not accept a government in which Hamas is included, regardless of how many votes they received.

Although the reconciliation between the two parties has not yet been achieved, Fayyad tended his resignation yet again. The failure of U.S. Secretary of State John Kerry to restart even a semblance of negotiations has severely undermined the popularity of the strategy of Abbas and Fayyad to achieve the end of the occupation through diplomatic means.

President Abbas is perhaps trying to maintain his own legitimacy and has accepted Fayyad’s resignation, distancing himself from the man who became associated with neoliberal policies.

A favored candidate to succeed Fayyad as prime minster has not yet been named.

This is Shir Hever for The Real News.

End

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